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When Should You Cancel Your Credit Cards?

July 13, 2014
by
Million Mile Secrets Million Mile Secrets

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Million Mile SecretsMillion Mile Secrets Team

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Million Mile Secrets reader Micah emails:

What card, if any, in your arsenal have you kept open and maintained the longest? Or do you always close them out after completing the minimum spending and receiving the sign-up bonus?

Keep up the great blog!

How Do You Decide Which Cards to Keep?

Which Card Have I Kept the Longest?

I still have an old Capital One credit card that I signed-up for in college. That was before I knew better! It sure bought me a lot of pizza in college. 🙂

But I still have this card sitting in my drawer, after all these years!

Your credit history will drop again when a card falls off your credit report after 10 years. You can reduce the impact of this by applying for new cards within the 10 year period So applying for new cards can help and hinder your length of credit history.

Keeping old cards is the best step you can take towards maintaining a longer credit history. My old Capital One card doesn’t charge an annual fee. So it doesn’t cost me anything to hang onto it. This is one reason why everyone should have a no annual fee card.

I use the Capital One card for a small purchase once every 6 months so the bank doesn’t close it because of inactivity.

Don’t Cancel a Card Right After You Earn the Sign-up Bonus!

You should never cancel your card right after you complete the minimum spendingto earn the sign-up bonus. Banks frown upon this practice and it could get you blacklisted (if you do this continously), which means no more Big Travel with Small Money for you!

Also, if the annual fee is waived, there’s no reason to cancel the card immediately.

Canceling Your Card Right Away Could Make the Bank Angry, and When the Bank Gets Angry You Lose!

I like to keep a card ~8 to ~10 months and then decide if the card is worth the annual fee. This helps establish a good relationship with the banks.

I evaluate whether paying the annual fee is worth the benefit of keeping the card. Many cards offer perks like free checked bags, free hotel nights etc. for keeping the card.

You Could Use Your Free Night From the Chase Hyatt Card to Stay at the Grand Hyatt Baha Mar, WhichIs Worth More Than the $75 Annual Fee!

There are lots of Hyatt hotels that cost more than $75 per night. So the benefits of this card are worth more than the cost of the annual fee. And it’s worth paying the annual fee if you plan on using the free night each year.

If you have a card that isn’t worth the annual fee, sometimes the bank will offer you incentives to keep the card when you call to cancel. This includes statement credits and miles, which could help make up for the annual fee.

Bottom Line

Never cancel a card immediately after earning the sign-up bonus! The banks do NOT like this and they could prevent you from signing-up for new cards in the future.

I suggest keeping a card until ~2 to ~3 months before the annual fee is due, and then decide whether the card is worth the annual fee.

Thanks for your question Micah!

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Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

20comments

Darius, I was on my DH’s citi dividend card for a long time. He has had it for 10 years now. Then I removed myself from it about two years ago (don’t ask why). It still shows on my credit profile. Do you think it would help my credit history to become an AU again on that card? Number is still the same. I personally don’t have any card left in my wallet that is 10 years old (if only I knew better).

OK, so I have an Amex Starwood Preferred coming up for renewal in August. So I called them to cancel since I just opened an SPG Business last month. They offered me 1,500 points, but I’d still have to pay the $65 annual fee. That’s not worth it, is it?

Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)